City Union Bank Gold Loan becomes an asset for the company

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City Union Bank Gold Loan becomes an asset for the company

People having idle gold at home became an asset for the south based private sector lender, City Union Bank (CUB). The bank is all set to focus on the Emergency credit line guarantee scheme (ECLGS), their gold loan service, and the restructuring of their facilities. City Union Bank Gold loan helped the bank sustain themselves and retain their customer base. People having disrupted income preferred to keep their gold as collateral with the bank and getting about 70% to 80% of the market value as the loan amount from the bank. Their low-interest rate and low processing fee led to the higher demands for gold loans from the bank. The management of City Union Bank is now aiming to work to hold their borrowers steadfast and the customer slippage at a minimum rate.

N Kamakodi, MD and CEO of City Union Bank while talking to an earnings call said that their current growth is majorly coming from the disbursal of ECLGS loans and the gold loans. He further mentioned that they are sure to review this in the Fourth quarter and form a decision as to how they can attain maximum benefits from it. Kamakodi also talked about the statistics of the bank saying that the hike in the disbursement of ECLGS and gold loans during the first half of the current financial year gave way to better CAR from 16.29% to 17.36% on account of the zero percent risk weight prescription.

According to the recent data, gold loans stand at Rs 4,537 crore for the bank and are expected to go up to 20%-22% of the portfolio. The demand for ECLGS and gold loans is higher as the customers find it a more convenient mode of loan to repay old loans and for this reason, City Union bank is set to make the most out of it.

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